The market has a nash-cournot equilibrium

Assignment Help Business Economics
Reference no: EM131004542

Two firms, each in a different country, sell homogeneous output in a third country. Government 1 subsidizes its domestic firm by s per unit. The other government intervention, the market has a Nash-Cournot equilibrium. Suppose demand is linear, p=5-q1-q2, and each firm's marginal and average costs of production are constant at m.

Government 1 maximizes net national income (it does not care about transfers between the government and the firm, so it maximizes the firm's profit net of the transfers).

 

Show that Government 1's optimal s resaults in its firm producing the Stackelberg leader quantity and the other firm producing the Stackelberg follower quantity in equilibrium.

Reference no: EM131004542

Questions Cloud

The difference between playing a board game : The difference between playing a board game and playing a video game is the a) eliminatiion of free riders b) technology of the video game c) involvement of fewer rivals or d) involvement of free rider
Approximate yield to maturity on discount bond : A U.S. Treasury bill is an example of a simple loan, coupon bond, fixed-payment loan, or discount bond? The estimated current purchasing price of a discount bond with a face value of ?$2000 and a yield to maturity of 11% is____ ? What is the approxim..
First define moral hazard and provide a specific example : First define moral hazard and provide a specific example. Then, discuss what you believe should be the government's role pertaining to this subject.
Monopoly power comes from market acceptance : Consider the statement, “Monopoly power comes from market acceptance, not from a patent, a prettier product, a slick advertising campaign, or anything else. So rather than spend your time in court, you should be out there drumming up business.” Do yo..
The market has a nash-cournot equilibrium : Two firms, each in a different country, sell homogeneous output in a third country. Government 1 subsidizes its domestic firm by s per unit. The other government intervention, the market has a Nash-Cournot equilibrium. Show that Government 1's optima..
Real interest rate higher lowreal interest rate : Given the nominal interest rate of 17?% and the expected inflation of 13?%, then the value of the real interest rate is ___ ? with the real interest rate equal to 3?% and the expected inflation equal to 4?%, then the value of the nominal interest rat..
What happens with no diminishing returns : What happens with no diminishing returns? Consider a Solow model where the production function no longer exhibits diminishing returns to capital accumulation. Draw the Solow diagram in this case. What happens to the growth rate of per capita GDP over..
Consider a onetime change in government policy : An increase in the labor force: Consider a onetime change in government policy that immediately and permanently increases the level of the labor force in an economy (such as a more generous immigration policy). In particular, suppose it rises permane..

Reviews

Write a Review

 

Business Economics Questions & Answers

  Find the best response function for each firm

Two identical firms compete in competition (Cournot competition) in the same market where the inverse demand is P(Q) = 100 − Q. The constant marginal cost of both firms is 10. Find the best response function for each firm. (b) What is the Cournot (si..

  What are the different forms of terrorism

Why might governments nationalize firms and do they have added advantage or unfair one over the private owned firms? What are the different forms of terrorism and how can international managers meet this challenge?

  Average amount of money spent

Recent survey of high school students, it was found that the average amount of money spent on entertainment each week. Values are representative of all high school students.

  Prepare the entry for dividend declaration

Bell company has stock outstanding as follows, $10 par per share, 140000 shares, preferred 5%, 100 par per share, 8000 shares.

  Qq1 consider two persons ann and bill and two-goodsx and y

q.q1. consider two persons ann and bill and two-goodsx and y exchange economy. the total endowment of the economy is

  A firm under monopolistic competition will earn

If the demand curve is QD = 100 - 10P and there is a $1 price increase, then the elasticity of demand at P = 2 is 2. If the absolute value of a demand elasticity is less than 1, then

  Contradiction by using the relevant budget equation

Consider a consumer who spends all of her income on two goods. Prove that it is impossible for both goods to be inferior for this individual. (Suppose the assertion is not true. Write algebraically what this means, and derive a contradiction by using..

  Budgeting miscellaneous expenses

Your department is budgeting miscellaneous expenses for the next 5 years. Your best guess at the annual inflation rate is 3.9%, and the combined MARR is 15%. Expenses currently run $14,500 per year. Assume that expenses are end-of-year payments.

  What was percentage change in per capita real gdp

In 2016, a nation's population was 10 million, its real GDP was $1.21 billion, and its GDP deflator had a value of 121. By 2017, its population had increased to 12 million, its real GDP had risen to $1.5 billion, and its GDP deflator had a value of 1..

  Under the foreign sovereign immunities act

Which of the following is an example of an autonomous agency of the United Nations? Which of the following is provided under the Foreign Sovereign Immunities Act? Throughout Christianity, divine and natural laws have been issued in the form of ______..

  Discuss balance of fixed and variable costs for organization

Discuss balance of fixed and variable costs for organization. Explain how has Internet changed this balance for organizations.

  Assume that the minimum wage in illinois is increased

Given the following information for the market for McDonalds Quarter Pounder with Cheese large combo meals in Illinois locations: Assume that the minimum wage in Illinois is increased. Carefully explain what will happen to the market for

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd